TIOL-DDT 1897 · the untouched capture
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<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=14276"><img src="http://www.taxindiaonline.com/RC2/image/ddt/ddt_1794.jpg" alt="DDT in Limca Book of Records" width="175" height="120" hspace="5" border="0" align="right"></a></font></strong></font><font color="#663399" size="3">TIOL-DDT 1897 </font><br>
10.07.2012 <br>
TUESDAY </strong></font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Exempted Service - Export - An unwanted 'NOT' </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>NEW</strong> Sub-rule 8 inserted in Rule 6 of the CENVAT Credit Rules by Notification No. 28/2012-CE NT dated 20.06.2012 reads as: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>(8) For the purpose of this rule, a service provided or agreed to be provided shall not be an exempted service when:-</em></font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(a) the service satisfies the conditions specified under rule 6A of the Service Tax Rules, 1994 and the payment for the service is to be received in convertible foreign currency; and </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">(b) such payment has <font size="4"><strong><u>not</u></strong></font> been received for a period of six months or such extended period as maybe allowed from time-to-time by the Reserve Bank of India, from the date of provision. </font></em></p>
</blockquote>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">This means that if payment<strong> is received</strong> within six months or within the time allowed by the RBI, the export of service would be treated as an exempted service and all liabilities follow. If the payment is not received, there is no liability! </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Certainly, this couldn't have been the intention of the exalted lawmakers. The intention must be exactly the opposite, but the sentence is framed in such a complicated way that now export of services for which payment is received will be treated as exempted service and the exporter has to reverse the credit taken!!!. The sentence is so complicated that removal of the word, “NOT” will not solve this knotty problem. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In fact, a similar provision is correctly and nicely worded in the Act - Finance Act, 1994, in respect of rebate. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Proviso to Section 93A reads as, </font></p>
<blockquote>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Provided that where any rebate has been allowed on any goods or services under this section and the sale proceeds in respect of such goods or consideration in respect of such services are not received by or on behalf of the exporter in India within the time allowed by the Reserve Bank of India under section 8 of the Foreign Exchange Management Act, 1999 (42 of 1999), such rebates shall be deemed never to have been allowed and the Central Government may recover or adjust the amount of such rebate in such manner as may be prescribed. </font></em></p>
</blockquote>
<p align="justify"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the Board make amends before the field starts issuing Show Cause Notices? </font></strong></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">SOS - Not Able to File ER-8 - Will DG, Systems Help? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THOSE </strong>who are paying duty under Notification No. 1/2011-CE dated 01.03.2011 are required to file a quarterly return in Form ER-8. This Notification prescribes a duty rate of 2%. This duty was 1% before the 2012 Budget. Obviously, the DG, Systems has overlooked this change and they have not updated the form in their system. The return still shows duty rate as 1% and the system does not accept if you want to pay 2%. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Today is the last date for filing this return for the quarter ending 30.06.2012 and many assessees are not able to file the return electronically. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Will the Board extend the last date and will Systems update themselves? </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Business Chiefs Want sops from the New FM - Rangarajan Not Convinced? </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>LEADERS</strong> of the three top business chambers - Confederation of Indian Industry (CII), Associated Chambers of Commerce and Industry of India (Assocham) and PHD Chamber of Commerce and Industry (PHDCCI), met the Prime Minister's Economic Advisory Council (PMEAC) Chairman, C. Rangarajan yesterday. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">CII wanted a reduction in repo rate by 100 basis points, and reduction of Cash Reserve Ratio (CRR) by 100 basis points. They also wanted an economic revival package. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Addressing a different meeting, Dr. Rangarajan firmly declared that there is no scope for a kind of stimulus provided in 2008. </font></p>
<p align="center"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif">Sunil Achutan Joins TIOL </font></strong></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/achutan_sk.jpg" alt="Legal Corner Icon" width="274" height="274" hspace="5" border="1" align="center"></font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>SUNIL</strong> is no stranger to TIOL Netizens as he is a prolific writer and had contributed erudite articles for us. A very knowledgeable person with deep understanding of the indirect tax law, Sunil brings with him immense analytical skills and will add tremendous value to the editorial worth of TIOL. After putting in more than twenty years of service in the Central Excise Department, he is leaving the department today to join our edit team as senior editor. Team TIOL heartily welcomes our new jewel. </font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Please see our<strong> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=15409" target="_blank">Guest Column</a></strong> for an article by Sunil written some time back. </font></p>
<p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600">Jurispruden</font><font color="#FF6633" size="5">tiol</font><font color="#006600"> - Wednesday's cases</font></strong></font></strong></font></p>
<p><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_hammer.jpg" alt="Legal Corner Icon" width="100" height="84" hspace="5" border="0" align="left"><strong><font color="#663399">Customs </font></strong></font></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Government directed to ban import of all hazardous/toxic wastes, which had been identified and declared to be so under BASEL Convention and its different protocols: SC </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THIS</strong> writ petition has been filed in 1995 by the Research Foundation for Science Technology and Natural Resource Policy, through its Director, Ms.Vandna Shiva, for the following reliefs: </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><em>1. direct the Union of India banning all imports of all hazardous/toxic wastes; </em></font></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">2. direct amendment of rules in conformity with the BASEL Convention and Article 21, 47 and 48A of the Constitution as interpreted by this Court; </font></em></p>
<p align="justify"><em><font size="2" face="Verdana, Arial, Helvetica, sans-serif">3. declare that without adequate protection to the workers and public and without any provision of sound environment management of disposal of hazardous/toxic wastes, the Hazardous Wastes (Management & Handling) Rules, 1989 are violative of Fundamental Rights and, therefore, unconstitutional. </font></em></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Income Tax </font></strong></p>
<p align="justify"><font size="2"><strong><font color="#FF6633" face="Verdana, Arial, Helvetica, sans-serif">Interest
tax - </font></strong></font><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">Whether
mere absence of <em>mens rea</em> warrants cancellation of penalty under
Sec 13 - NO, penalty imposed on Fortis Financial for not treating bill
discounting charges as interest income upheld by Delhi High Court</font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE </strong>issues before the Bench
are - Whether provisions of Sec 13 of the Interest Tax Act and Sec 271(1)(c)
are <em>pari materia; </em> Whether when Revenue imposes penalty u/s 13,
in the absence of 'explanation' unlike the I-T Act, the onus does not automatically
shift to assessee; Whether when two legal interpreations are available
on an issue, penalty cannot be imposed merely because the Revenue's interpreation
is finally upheld by the court; Whether <em>mens rea</em> is required to
be established before penalty is imposed u/s 13; Whether establishing <em>mens
rea</em> is not important in civil penalty cases; Whether mere absence
of <em>mens rea</em> warrants cancellation of penalty u/s 13; Whether in
view of amendment in Sec 2(7) of the Interest Tax Act in October, 1991,
discounting charges are clearly an interest income and no two legal interpreations
are plausible in this case and whether CBDT Circular No 647 of 1993 explaining
the applicability of Sec 194A does not explain the amendment to Sec 2(7)
of the Interest tax act. And the final verdict goes against the assessee.</font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">Service Tax </font></strong></p>
<p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">If after sale service expenses collected by dealers are included in assessable value u/s 4 of CEA, 1944, the assessee is entitled for input service credit of service tax paid thereon by dealers - Revenue appeal dismissed and appeal by assessee remanded: CESTAT </font></strong></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>THE</strong> issue is as to whether the assessee is entitled to avail input service credit on after sales service charges paid by the dealers. </font></p>
<p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">One of the appeals before the CESTAT is by the Revenue against the order passed by the adjudicating authority viz. CCE, Nashik holding that the assessee is entitled to take input service credit on after sales service provided by the dealer subject to the condition that the service charges are included in the assessable value of the vehicle. The second appeal is by the assessee against the order of the CCE, Mumbai-V disallowing credit on the same service. </font></p>
<p align="justify"><strong><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif">See our columns Tomorrow for the judgements </font></strong></p>
<p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT</strong></font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a Nice Day </font></p>
<p><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> <a href="mailto:vijaywrite@taxindiaonline.com"><strong>vijaywrite@taxindiaonline.com </strong></a></font></p>
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